Before the Pathet Lao came to power, there was a growing market in Laos for capital and consumer goods. Vientiane was the wholesale distributing point for much of the country. In late 1975, private trade was banned and many small traders and businessmen—including Chinese, Japanese, Pakistani, Thai, and Vietnamese—fled the country. The new government subsequently made it clear that the trend toward consumerism would be reversed in favor of a production-oriented society. The Pathet Lao entered directly into the distribution and sale of essential commodities, such as rice and sugar, and prices were brought under control. In 1979, however, the ban on private trade was lifted, and consumer items, which had all but disappeared from circulation, were once again available.
In the countryside, barter replaces money as the principal method of exchange. Markets are held at regular intervals, generally one day a week, at central villages or smaller towns. Once or twice a year, lowland farmers barter cloth and handicraft products with the mountain peoples for cereals, deer and rhinoceros horns, and ivory. Certain items recognized as media of exchange include tea, opium, tobacco, salt, silver, and gold. As of 1999, subsistence farming accounted for about 51% of the GDP, employing about 85% of the nation's workforce.
The New Economic Mechanism (NEM), a set of economic reforms instituted in 1986 across all sectors of the economy, has begun to demonstrate results in establishing a market-based economy. The government freed the market price of rice and other food staples in 1986, increasing agricultural output despite severe climatic conditions. Later reforms—floating the national currency, the kip, and freeing interest rates—stimulated a market-based economy and controlled inflation. Major land reforms in 1988 included the freedom to sell products at market-determined prices. Growth from these stimuli is demonstrated by the doubling of private shops in Vientiane and abundant fairly-priced goods in the markets. In a 1989 agreement with the World Bank and the International Monetary Fund, the government initiated reforms toward privatization and monetary reforms.
The usual hours of business are from 8 AM to 4 PM , Monday through Friday. Some factories and private companies extend the workday to 5 PM and factories are permitted to maintain a six day workweek if desired. Banking hours are 8 to 10:30 AM and 2 to 3:30 PM , Monday–Friday.